Anyone involved in the oil and gas sector taking a look this morning’s press release issued on the UK Government’s energy-security plan would be left scratching their head.
The “powering-up Britain” press release runs to more than 2,600 words, yet there is not one mention of the continuing importance of the North Sea hydrocarbon industry, which plays a massive role in keeping our lights on.
The document certainly has an exciting headline: “Shapps sets out plans to drive multibillion-pound investment in energy revolution.”
Despite this positive message, the Acorn carbon-capture and storage development at St Fergus is unfortunately still having to continue its long wait for support.
The UK Government said today that Acorn is a “leading contender” for development in a newly-launched funding round.
However, Energy Voice says details on a timeline for the actual selection and funding award have not been disclosed - meaning the project is not yet any further forward.
Missed out
Acorn missed out on “Track 1” funding in 2021, which was part of a £1billion package to get the first two clusters up and running, and has long been considered a front runner for “Track 2”.
This morning, the UK Government has launched “Track 2” and said Acorn “is one of the two best placed” for funding.
Meanwhile, on looking through the “powering-up Britain” release, it's as though the Westminster politicians want to ignore the significance of the vital oil and gas sector, which supports more than 200,000 jobs nationwide.
Despite growing output from the renewable industry, oil and gas still provides more than three-quarters of UK energy, with production from our waters enough to meet over half these needs.
The North Sea oil and gas industry is still very much at the heart of UK energy security – and will be for decades to come if given the right government support. It has been claimed the offshore sector has been airbrushed out of today's press release to avoid criticism from opposition parties and minority pressure groups.
But what message does this give to investors at home and abroad about the oil and gas sector’s future in this country? Certainly not a positive one.
Expectations
Expectations had been high in the North-east about what today’s energy-security plan would bring.
Media reports suggested that announcements vital to the future health of the area’s economy were expected.
These were thought to include a “price floor” for the controversial windfall tax on North Sea oil and gas producers.
It was also anticipated that there would be positive news on the Acorn development.
Meanwhile, an update was believed to be on the way on plans for Rosebank - a £4.5billion development proposed for west of Shetland. A decision on a licence for Rosebank is said to have reached the desk of Energy Secretary Grant Shapps.
But one industry insider suggests news relating to oil and gas has been deliberately pushed back to a later date.
Inclusion
There is thought to have been fears their inclusion would give Shadow Secretary of State for Climate Change and Net Zero Ed Miliband a stick to beat ministers with.
It is believed that the oil and gas measures are still happening, with an announcement possible next week.
Fergus Mutch, policy adviser at Aberdeen & Grampian Chamber of Commerce, said: “A multibillion-pound investment in energy sounds like a winning approach but, as ever, the devil will be in the detail.
“On carbon capture, port infrastructure and green hydrogen production the North-east can lead the way, with our globally-recognised energy expertise, but only if this strategy comes with the right government support which allows industry to take the initiative, create jobs and a sustainable future for our region.
“If a clear timeline is not unveiled for the Acorn project to advance to the next stage then, once again, there will be disappointment in the North-east.
“We need to see this shovel-ready project fast-tracked or else risk investment drifting elsewhere.
“If this were to happen, it would be a real hammer blow to an industry which stands ready and waiting to play its part in unlocking that net-zero future we are all working towards.
Overly-severe
“Meanwhile, the overly-severe application of the windfall tax continues to shake investor confidence in the North Sea at precisely that time we need to be maximising domestic energy security and channeling funding into energy transition. Capital flight away from the UK Continental Shelf could set progress back significantly on both these fronts.
“It doesn’t look like there will be much within the measures announced today to rebalance this ill-conceived surcharge with a price floor, which the chamber and industry have been calling for.”
Aberdeen South MP and SNP Westminster leader Stephen Flynn said: “This was trailed as ‘green energy day’, but it feels more like ‘Groundhog Day’ with a complete lack of credible detail on when the Acorn project will be given the green light to progress – you really are left to ponder what exactly the point was in this so-called announcement.”
Prime Minister Rishi Sunak said the UK Government was driving forward plans to boost renewables, revive nuclear and build new thriving industries like carbon capture.
He added this would, in turn, create jobs across the country, provide new opportunities for British businesses at home and abroad, and maintain world-leading action to reach net zero.
Mr Shapps said: “Access to cheap, abundant and reliable energy provide the foundation stone of a thriving economy, with our homes and businesses relying on it to deliver our future prosperity.”
Click here to see the full press release on the UK Government’s energy-security plan.